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How To Settle Your Debts in Kansas

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In a Nutshell

This guide provides you with information to determine whether a debt settlement program is right for you. It will also provide a brief overview of alternatives to debt settlement in case this is not the best option to resolve your debt.  

Written by Upsolve Team
Updated December 31, 2021

Most Americans are familiar with the popular movie, “The Wizard of Oz,” which is about a young girl and her family from Kansas. However, few know that L. Frank Baum, the author of the book, upon which the movie is based, filed for bankruptcy in 1911. In fact, Baum signed away the film rights to the book to help pay off his debts. So, Baum did not get any money from this hugely successful movie based on his book. 

Maybe like Baum, you need debt relief. Could debt settlement help you manage your personal finances? Debt settlement involves paying a significant portion of your debt in exchange for partial debt forgiveness from your creditors. To save time and money, creditors usually settle for less than the total amount of debt owed once an account holder’s balance is several months past due. Debt settlement allows you to pay less than the outstanding balances you owe. 

Debt settlement may be a good option for you if your credit score is low. If you have assets like stocks, that you can sell to settle your debts, then you may be a good candidate for this type of debt relief. However, not every type of debt may be settled in this way. Secured debt (e.g. auto loans), that allows your creditors to repossess their property in the event you default on your payments, can't generally be settled. Unsecured debt, like credit cards, gas cards, medical bills, and signature loans may potentially be settled.

If you seek help from a Kansas debt settlement company, fully disclose all the types of debt you have. The company can then provide you with information on which debts may or may not be good candidates for the debt settlement process. A Kansas debt settlement company can also explain the tax consequences on your income taxes and taxable income when you file with the IRS if more than $600 in debt is forgiven.

Learn More Through Free Nonprofit Credit Counseling

Did you know that anyone in Kansas considering debt relief options can talk to a certified credit counselor for free? A credit counseling session is designed to help you understand your debt management options. The initial session is always free. You’ll provide your credit counselor with information about your debts, income, and expenses. Seek help from a credit counseling agency that is a member of the National Foundation for Credit Counseling (NFCC). All NFCC member agencies are accredited and have standards of conduct, and their counselors are trained and certified. They're experienced in personal finance and money management, and everything you say is confidential. 

Your credit counselor may or may not recommend that you pursue a debt settlement. Inquire as to why this is their recommendation if they don't recommend a debt settlement. You can always ask questions in order to make an informed decision that works for you and your family. The counselor may discuss other debt-relief options such as debt management. If you choose a debt management plan or DMP, the credit counseling agency can help you with this option which differs from debt settlement because they allow you to pay your debts in full instead of exchanging partial payment for partial debt forgiveness.

How To Settle Your Debts in Kansas 

This guide provides you with information to determine whether a debt settlement program is right for you. It will also provide a brief overview of alternatives to debt settlement in case this is not the best option to resolve your debt.  

Collect the Details About Your Debts

An important factor in deciding your best debt relief option is to know your credit score. You can get this score from the credit bureaus (e.g. Experian, Equifax, and TransUnion) at the same time that you pull your free credit report. Credit scores can be low or high depending on many factors, including making payments on time and the balances you carry on your accounts. If your credit score is good or excellent, you may benefit from choosing an option different from a debt settlement because debt settlement will negatively affect your score. If your score is low, then debt settlement may be a good debt-relief option for you. By reviewing your credit report, you will learn your payment history and whether you have late or missed payments. You can also use your report to evaluate which debts may be good candidates for settlement. While you’re gathering this information, also review recent bank account statements to see what you pay on bills each month. Your two most recent credit card and other statements like car loans, federal student loans will show your current balances, interest rates, and monthly payments. This information will be invaluable when you speak with a credit counselor about your situation and when you construct a budget. 

Collect Details About Your Ability to Settle Your Debts

If you don’t already have a monthly budget, you will need to make one to see if you’re in a financial position to settle your debts. In your budget, list the income you earn from a job or from payments you receive monthly like Social Security or veteran’s benefits. If you earn a paycheck, look at your two most recent paycheck stubs to see how much you make each month and how often you get paid. Some Kansas consumers may get paid every two weeks while others may get paid on specific dates twice a month like the 15th and 30th. This information will help you determine when to schedule a debt settlement payment or set of payments. 

Your budget should also include the expenses you incur each month and regularly (but not necessarily monthly). Some expense amounts will vary, like gas and food. Others, such as your car insurance or rent, have the same payment due each month. Include all of these in your budget, along with any expenses you pay every so often (e.g. annual car registration). To complete a debt settlement successfully, you will either need to have funds available immediately or will need to have money left over in your budget each month to set aside for settling with your creditors. Putting together an accurate budget will help you determine whether you can afford to settle your debts in either way. 

Learn About the Costs to Settle Your Debts in Kansas

There are costs associated with debt settlement. If you choose to work with a Kansas debt settlement company, they will negotiate with your creditors to accept less than the full amount on the debt you owe. This service is not free. A Kansas debt settlement company can charge anywhere from 8% to 15% of your total debt amount in exchange for their services. There is usually an initial set up fee which can be up to $50. Typically, the company will ask you to put money into a separate bank account that they will use to make the settlement payments to your creditors. This bank account may cost money to set up. Finally, as you or a debt settlement company works to secure compromises with your creditors, you will accrue fees and penalties on your account for as long as your account remains delinquent and unsettled. 

Decide Whether to Work with a Kansas Debt Settlement Company

Maybe you have good computer skills, and are organized, and don’t mind negotiating with your creditors. If so, you don’t need to work with a Kansas debt settlement company if you don’t want to. Not using a debt settlement company can save you money and put you in control of the settlement process. However, consider that a Kansas debt settlement company has experience and information that you don’t. They typically know what terms creditors will accept and what they won’t. If you are settling your debts alone and run into issues, there will be no one there to assist you. So carefully weigh the options of going it alone or using a company. Both approaches have advantages and disadvantages, so choose the option that makes the most sense for you. 

Research Kansas Debt Settlement Companies

Finding a trustworthy debt settlement company takes time. You’ll need to research your options carefully to avoid scams. There are red flags to look for when you start your search, including overly optimistic phrases such as “new government programs” and “pennies on the dollar.”  Avoid companies making guarantees or asking for fees before they settle your debts. Go to the Kansas consumer protection division in the attorney general’s office to see any settlement company complaints have been filed against operations you’re interested in working with. The Better Business Bureau in Kansas is also another resource you can use to research the reputation of any given debt settlement company. Trustworthy companies will have no problem explaining in detail the benefits and risks of debt settlement. They will also provide you with honest information about their services and fee structure upfront. Your credit counselor may be able to recommend a particular company in your area for your consideration.

How to Make Your Debt Settlement Work

Unless you can pay your creditors lump sum payments to settle your debts immediately, you’ll likely need to make 2-4 installment payments to a debt settlement company before you can fund acceptable offers. If you are using a debt settlement company, you will give them the funds which they can place in a bank account while they negotiate settlements with each creditor. So, for your debt settlement plan to be successful, you will need to stay current with your monthly payments for the entire term of repayment. Planning ahead will help make your debt settlement work. Budget for emergencies so they don’t interfere with keeping your payments current. You might use a credit card for emergencies or savings. Schedule your monthly payment so that it is not due at the first of the month when your rent or mortgage payment is due. A good rule is to make the debt settlement payment due on the 16th if you get paid on the 15th and 30th each month. Your plan for success should also include making extra payments if you come into money from birthday gifts or an income tax refund. Making this sacrifice will lead to being debt-free sooner.

Alternatives to Debt Settlement

A debt settlement may not be in your best interest, depending on your specific financial situation. If you have little or no money available to fund settlements after paying your expenses each month, then it is important to consider debt management and debt relief alternatives.    

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Kansas Debt Consolidation

One alternative to debt settlement involves securing a debt consolidation loan, wherein you take all of your current high-interest, unsecured debts and combine them into one single account with a single monthly payment. By doing this, you’ll save money on interest and avoid paying multiple late fees each month. This may make it easier for you to keep up with your other monthly expenses such as rent.

A Kansas debt consolidation loan is only available to Kansas consumers who have excellent credit, so if you have poor credit, you may want to consider a debt management plan instead. 

Kansas Debt Management Plan

A debt management plan or DMP may be a good option if your credit score is low and you’re interested in consolidating your debts. A Kansas DMP will combine your debts into a single account without requiring you to secure a new line of credit. Instead, you will make a single affordable payment each month to a nonprofit credit counseling agency. They collect the funds from you and then distribute those funds to your creditors each month. The state of Kansas allows a one-time set-up fee of $10.00 per account with a maximum amount of $75 for all your accounts and a $3.50 fee per month for each account not to exceed $40. This is therefore a cheap and effective way to streamline your debt repayment process while lowering your monthly payment obligations and interest rates. 

Kansas Bankruptcy

If you simply can’t afford other debt management options, pursuing a Kansas Chapter 7 bankruptcy may be the best option for you even if it will temporarily lower your credit score. Especially if you don’t earn much money, this process may allow you to become debt-free in just a few months. To learn more about bankruptcy, you can schedule a free consultation with a bankruptcy lawyer in your area. Can’t afford an attorney? If you are eligible to file for Chapter 7 bankruptcy, Upsolve may be able to help you pursue this debt relief option for free. 

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